The influence of the coronavirus crisis on the dealers´ rental economy

3 November 2020, 11:01

by LECTURA GmbH (Europe, International)

Covid Special, part 5

Due to the redundancies and closures of many businesses, lots of customers began to save and focus on other alternatives to buying new equipment/machines. One of the most common/intuitive alternatives is renting machines/equipment. Therefore, the COVID survey focused on the possibility of increased popularity in renting machines among dealers. Even though about half of the dealers do not consider this option, in the following text, we would like to explore who (the primary type of business, size of a company in numbers of employees) the dealers who focused on renting are and how they deal with the crisis.

How many dealers changed their business strategy?

As Covid-19 has hit economies, it may have a lasting impact on heavy machinery sectors. Rental preferences, instead of buying, tend to increase during any type of recession. People are seriously rethinking the advantages of renting versus owning. Dealers have to consider how to react to such a situation. Therefore 14,8% of our respondents claimed they started renting during the coronavirus crisis, and 20,1% is considering this alternative. Another 20% had tried the strategy before the crisis started. However, the remaining 45,1% of dealers do not plan to try renting their machinery.

Which characteristics differentiate dealers who are open to renting and dealers who do not want to consider the option?

Given that the dealers participating in the covid survey had different specializations, we decided to examine whether dealers from different specializations approach renting differently. However, we found no statistically significant association between dealers´ specialization and attitudes towards renting (p = 0.146).

On the other hand, when considering the size of the company dealers work in, we discovered statistically significant differences between companies with different numbers of employees (p < 0.001). For example, the bigger the company was, the more often the respondents claimed they had been renting before the crisis came. The opposite pattern was observed for the option indicating no plans for renting. The differences in options indicating renting consideration and the start of renting during the crisis were less pronounced.

Does the attitude towards renting machines influence the perceived impact of the crisis?

Finding this information, we further wanted to explore dealers´ ways of coping with the crisis - especially, how did the crisis affect their business and what type of support the dealers expect.

Beginning with the impact of the crisis, we discovered dealers who had been already renting before the crisis were those who most frequently reported they gained an increase (10,1%). When considering the rest of the respondents, almost 5 % of the dealers who had started renting during the crisis subsequently gained an increase, too. The dealers who did not plan to rent were those who mostly reported no change (40,7%). Finally, when considering the decrease, the groups who reported it mostly were dealers who reported they considered (70%) and started renting during the crisis (71,6%). One possible explanation of the result may come from the reflection of the decrease and subsequent need to intervene in some way - beginning to rent machines instead of selling them.

The last important finding we discovered was the statistically significant association between the attitude towards renting strategy and preference of support provider (p < 0,01). What is interesting, the respondents who claimed they had started to rent during the crisis mostly reported they expected support from OEMs (43,5%). However, the remaining groups of respondents mostly indicated they do not expect support from any institution. The results are again presented in the chart below indicating other differences mainly in the option “European authorities” and “banks”.

To conclude, results from our Covid survey confirm the assumption renting is often chosen as an alternative to selling machines. Although the big companies (more than 50 employees) had been used to this strategy before the coronavirus crisis came, the smaller dealers flexibly adopted it when the crisis came in reaction to greater decreases. We may only speculate whether it was the reaction to not fulfilled support from the OEMs, but the dealers who started to rent machines during the crises would appreciate the support from them.

Would you like to know more about the impact of COVID pandemic on the construction industry? Click here for the full report by LECTURA, ERA and CECE!

or continue reading the Covid Special ==> Part 1: The case study on German and British machine owners: similarities and differences in the coronavirus crisis management

==> Part 2: Differences between the coronavirus crisis impact according to the company size

==> Part 3: Why did some contractors suffer from the decrease during the coronavirus crisis, and others experienced the growth of their business?

==> Part 4: When facing a crisis, what type and from whom people expect to support?

Source: LECTURA Verlag GmbH